Sept. 18 (Bloomberg) -- There’s profit in high-yield bonds even after the securities jumped 43 percent this year, according to Muzinich & Co., the New York-based manager of $5 billion in debt investments.

“You’re still getting wonderful value for your money,” company founder George Muzinich said in an interview in Sydney yesterday, where he’s seeking “several hundred million dollars” for his funds from Australian money managers. “Sub- investment grade is considered vile and sort of a dangerous area, and that artificial distinction creates opportunities.”

Demand for junk debt is rising as investors gain confidence the worst global recession since the 1930s is abating. Global high-yield notes rose 43 percent this year, according to Merrill Lynch & Co. index data. The extra yield buyers demand to own Asian high-risk bonds instead of U.S. Treasuries fell to 316 basis points yesterday, the lowest since the collapse of Lehman Brothers Holdings Inc. more than a year ago, JPMorgan Chase & Co. credit index data show.

That’s 44 percent more than the average 220 basis points over Treasuries investors demanded in 2007, the JPMorgan index shows. A basis point is 0.01 percentage point.

High-yield debt, also known as junk or speculative-grade, is rated Ba1 or below by Moody’s Investors Service, and BB+ or below by Standard & Poor’s and Fitch Ratings.

Index Rebound

Muzinich has been buying bonds sold by Macy’s Inc. and JC Penney Co., said George Muzinich, who founded the firm in 1988 after working for Brown Brothers Harriman & Co. in New York, Zurich and Paris. Muzinich’s index of global high-yield investments gained 16.9 percent in the seven months to July 31 after losing last year for the first time since inception in 2003, according to data published by the company.

Muzinich is visiting Australia to win some of the A$1.2 trillion ($1 trillion) invested in managed funds in the country, including more than A$210 billion in credit investments, he said.

The average Australian superannuation fund has 13.6 percent of assets in fixed-income securities, according to data from Rainmaker Group, a Sydney-based research firm, which doesn’t specify how much of that is speculative-grade.

Pacific Investment Management Co., manager of the world’s largest bond fund, and BlackRock Inc., the world’s biggest asset manager, oversee a combined 28 percent of fixed-income funds in Australia, Rainmaker data show.

To contact the reporter on this story: Sarah McDonald in Sydney at smcdonald23@bloomberg.net.

Last Updated: September 17, 2009 23:38 EDT